E.D.Hart

Waiting for Inflation? It May Take Awhile

There is much truth in your article, but I think that a previous response has a good point--its not just money supply but money supply plus velocity. When velocity picks up, inflation should pick up

Also, because Japanese debt bubble popped during a time of booming markets elsewhere...Japans experience may not be the best analogy. Todays debt crisis is global ---and global liquidity is being ramped up simultaneously.

Finally, I think you may have the causal relationship reversed between slack and liquidity:
"Looking further into the relationship we find that output gaps lead to disinflation and when the economy is producing more than potential estimates, inflation follows."
It seems more likely that falling money supply leads to output gaps, and that aggregate money supply growth plus velocity acceleration (inflation) leads to a pickup in economic activity.

Correlation is not causation.

Risk Management in Trending Markets

I wish all SA writers were as lucid and straightforward. Excellent article.